Understanding the steps of buying a home before you jump in can make the process much more exciting.
Buying your first home - it's a common goal, and it should feel exciting… but instead it can often feel intimidating, especially for first timers. Home-buying can be a complex process filled with jargon and unexpected challenges. The good news is, you can start preparing today by learning the process.
Whether you want to buy ASAP, or in a few years, understanding the steps involved, before you pursue a home purchase, will help you determine what actions you can take today to prepare; and being prepared leads to feeling ready and confident when the time is right to buy your dream place. Here are a few phases you'll want to get familiar with:
5 Phases of Buying a Home:
Like with most big life decisions, it's easier - both financially and emotionally - if you prepare beforehand; but it can be hard to know where to start. Even if you don't expect to buy for a few years, now is the time to get your budget and credit in good shape. When you are ready to buy, a good credit score could save you thousands of dollars over time. While you're in the preparing mindset, here's a few more things you can start thinking about well in advance of house hunting.
- Go House Hunting:
Think you might be ready to start house hunting? Double-check this "buying a house checklist " to make sure your prep is done. Then, let the search begin. Aside from going to open houses, the big two steps to supercharge your hunt are:
- Get preapproved for a mortgage.
- Get a real estate professional to help you with your house search.
Get recommendations from friends and family of trusted real estate professionals or mortgage lenders that have a history of providing a great experience.
- Buy a Home (!)
Woah…this just got serious. You found your dream place, your real estate professional helped you put in an offer, and that offer got accepted. Now things are moving (deep breath!). You'll likely then enter into a phase called "attorney review," during which two things happen:
- A professional inspection and appraisal (a.k.a. checking the place out).
- Your lender double-checks you (and that's why you've been preparing in advance).
Your real estate professional can help you with this whole process in detail, but here's an overview of the steps you go through with a lender.
- Play the Waiting Game:
After all the rushing around during the attorney review, you're probably anxiously awaiting move-in day. Unfortunately, there is likely some waiting time before "close" (when you actually buy the place, get the OK to move in and keys in-hand).
This can be a good time to slow down and make sure you're ready for all the costs that come with the close (no, unfortunately it's not just the down payment). Here is a list of items included in the infamous "closing costs." Be sure to ask your lender for definitions and clarity if you see something you don't understand.
- Enjoy your Place:
You bought a house! Move in, enjoy it, and show it off. Don't forget to offer your most handy friend some pizza to show you how to do the basic around-the-home maintenance, and think through what's a good DIY project vs. a job for a pro. This might be a good time to consult your budget and see how long it will be before you can truly afford that new furniture and home décor. that's now on your list of wants.
Figure out where you are in the home buying process, whether it's a few years away or you're actively searching. No matter where you are, take one small step today to help you feel more prepared for your home purchase. If it's time to fine-tune your budget or get smarter about your credit, make sure to check out the Next Door financial tools for help along your journey.